Marketing Mix Flashcards
What is the marketing mix?
In order for a business to be successful, it must find the right balance between its product/service, price, place and promotion – this is referred to as the Marketing Mix.
Describe product
This is the good or service the business provided to its customers.
Describe price
This is how much a business charges for its products/services.
Describe place
This is where (location) and how (method of distribution) the product is sold by the business.
Describe promotion
This is how customers are made aware of a product/service and are persuaded to purchase it.
What are the stages product development?
GAPTAP
Generate the idea- coming up with ideas following market research.
Analyse the idea- considering the different options and picking the best one.
Produce a prototype- making a model/early version of your product.
Test the product- carry out safety tests and also carry out test marketing with customers for feedback.
Alter the product- make necessary changes following testing.
Produce the product- start production of the product.
What is branding?
A brand is a logo, name or symbol that is given to a product that makes it instantly recognisable.
Advantages of branding
Higher prices can be charged for branded products.
Brands generate brand loyalty and mean greater sales.
Brands are perceived to be of a higher quality.
Brands are instantly recognisable.
Brands reduce the need for advertising.
Brands make it easier for a business to launch a new product under the same brand name as they are perceived to be of a high standard and are reliable.
Disadvantages of branding
If a product within the brand develops a poor reputation it can damage the whole brand name.
Establishing a brand is time consuming, lengthy and expensive process.
What are own brands?
These are products which are sold under the name of a supermarket or other retailer, rather than under the name of the manufacturing firm.
Features of own brands
Own brands are often cheaper than branded products.
Own brands are often seen as being inferior quality.
Own brands appeal to the sector of the market to whom price is important.
What is packaging?
The packaging of a product is very important - it serves an important function for protecting the product but also links to how it’s promoted.
Advantages of packaging
Can protect the product during transportation/delivery.
Can increase the shelf life of a product (particularly for food items).
Can make the product attractive and encourage customers to buy.
Can provide nutritional information and health guidance.
Can inform the customer how to successfully use/install the product.
Disadvantages of packaging
Distinctive packaging could be copied by own brands.
Pressure to use environmentally friendly packaging may lead to higher costs.
If distinctive packaging is littered it could create a negative reputation (e.g. Starbucks cups on the street).
Government legislation may force you to put certain information on packaging which highlights how unhealthy the product is (e.g. traffic light indicators).
What is the product life cycle?
This refers to the length of time a business expects to sell a product. This will last for many years for successful products but potentially only weeks for others.
What are the stages of the product life cycle?
Research and Development
Introduction
Growth
Maturity
Decline
Research and development
Money is invested into developing the product, carrying out research and making a prototype (GAPTAP).
The business is making a loss at this stage.
Introduction
The product is launched onto the market.
The product is heavily advertised to inform customers.
Sales will be low at this stage with little to no profit.
Growth
The product is becoming more well known and popular.
Advertising continues but at lower rate than before.
Sales are rapidly increasing. Profit is beginning to be made.
Maturity
Sales and profits have reached their peak.
The product is well established on the market.
Advertising is used only as a reminder.
New models/variations may be introduced to encourage long term sales.
Decline
The product popularity has fallen.
Sales and profits are falling.
There is strong competition in the market.
Factors affecting the setting of a product’s price
How much production cost.
How much profit the business wishes to make.
What competitors are charging.
Whether the product has a strong brand.
Whether the product is perceived to be of a high quality.
The stage in the product’s life cycle.
Pricing strategies
Low price
High/Premium price
Competitive
Cost plus profit
Psychological
Destroyer
Price skimming
Low price
Setting a price that is lower than competitors e.g. if a competitor charges £4.00 the business might charge £3.50.
High/Premium price
Setting a price higher than most other similar products in order to create the image of quality.
Competitive
Setting prices in line with your competitor.
(You cannot agree to charge the same price - that’s illegal - but you can react to your competitor changing their price and make yours the same)
Cost plus profit
Totalling up the cost of production for the product and adding on a fixed percentage to reach the selling price.
(Cost + Profit = Selling price)
Psychological
Charging a price which makes the customer think the product/service is cheaper than it actually is e.g. charging £9.99 instead of £10.
Destroyer
Setting prices artificially low for a short period of time in order to gain market share for competitors.
Competitors may be forced to lower their prices too or move out of the market.
Price skimming
Setting prices very high for a new/innovative product onto the market.
Prices will be lowered over a period of time as the product becomes less popular/out-of-date.
(e.g. games consoles are expensive when launched then decrease in price over a period of years)
Factors affecting choice of location
Where the customer is located.
Cost and availability of suitable premises.
Parking availability near the location.
Infrastructure (are there roads or rail links for your customer and suppliers?)
Government incentives (is there a grant available to set up in a particular location?)
Availability of employees in the local area.
Is there lots of competition nearby?
Methods of distribution
Air
Road
Rail
Sea
(all have an environmental impact)
Advantages of air
Products transported globally more quickly than other methods.
Large amounts of small products can be transported e.g. mail.
Disadvantages of air
Most expensive methods.
Fluctuating fuel costs.
Road still needed once goods arrive at airport.
Advantages of road
Door-to-door service.
Cheaper than rail or air transport.
Delivery can take place at any time of day.
Disadvantages of road
Slower method of distribution compared to rail and air.
Can be difficult to carry large, bulky, goods.
Not environmentally friendly and leads to increased pollution.
Advantages of rail
Large, bulky items can be transported around the country.
It is quicker to transport goods than by road or sea.
Reduces the carbon footprint.
Disadvantages of rail
Road is still needed once goods arrive at station.
Advantages of sea
Large, bulky items can be transported around the world.
Cheaper than rail and air transport for long distances.
Disadvantages of sea
Can take weeks/months to transport goods.
Requires additional transport at end of the journey e.g. road.
Sales promotion
Special offers
Loyalty cards
Coupons
Discounts
Competitions
Free gifts
Sponsorship
Product placement
Celebrity endorsement
Special offers
BOGOF- Buy one get one free. A customer purchases one product and receives another for free.
Loyalty cards
A customer receives points/credit for making continued purchases (e.g. Boots Advantage Card)
Coupons
Collectible vouchers which can be redeemed in store when purchasing a product.
Discounts
Reducing prices for a short period of time (e.g. 20% off sale)
Competitions
Being entered into a draw to win a prize when making a purchase.
Free Gifts
A customer receives an extra item with their purchase (e.g. a free case when you buy a new phone)
Sponsorship
A business provides funding for an event/cause in return for publicity and media exposure (e.g. Coca-Cola sponsoring the Olympics)
Product placement
A business pays for products to appear in films, TV shows or video games.
Celebrity endorsement
A business pays a celebrity to publicly support/use their products/services (e.g. Gary Lineker for Walkers crisps)
